Guilty Plea by McNall Accountant

Robert J. Houston, a former accountant for King President Bruce McNall, pleaded guilty Wednesday to single counts of bank fraud, wire fraud and conspiracy, agreeing to cooperate with federal prosecutors in the ongoing investigation into McNall’s banking practices.

Houston, 44, faces a maximum prison term of 40 years, five years of supervised release and a $1.5-million fine, according to Assistant U.S. Attorney Peter G. Spivack. U.S. District Judge Richard Paez set a sentencing date of Feb. 16.

Paez accepted a request from Houston’s attorney, David Reed, to seal the plea agreement, which stems in part from the fact that Houston is cooperating with the government. Reed said he will not comment on the case.

Houston, the second McNall business associate to plead guilty, helped McNall secure more than $150 million in loans by preparing and filing false tax returns and financial statements, starting as far back as January 1986, according to court documents. McNall’s former vice president and controller, Joanna Orehek, pleaded guilty in August to single counts of wire fraud and conspiracy.

In all, Houston admitted to helping defraud four banks--European American Bank, the French bank Credit Lyonnais, Bank of America and Union Bank--with tax returns and financial statements that inflated McNall’s income and assets and understated or failed to report outstanding loans. An earlier allegation involving First Bank Los Angeles was dropped.